Globalstar has announced that it has implemented the contingency launch plan previously factored into its business plan and expects to commence commercial service in the third quarter of 1999.
Globalstar, which successfully launched eight satellites earlier
this year, expects to launch an additional 24 satellites by May 1999
and to complete the launching of its constellation of 48 satellites
with four in-orbit spares by December 1999.
The contingency launch plan was activated immediately following
the failed launch of 12 Globalstar satellites on board a Zenit rocket
on September 9, 1998. To accomplish completion of the constellation,
Globalstar will accelerate the first three of its Soyuz launches,
previously scheduled for the first quarter of 1999, to November and
December of 1998 and January of 1999. Globalstar will select from
among an additional five Soyuz launches of four satellites each, six
Delta 2 launches of four satellites each and two Zenit launches to
complete the constellation by the end of 1999.
This robust plan, which includes more Delta and Soyuz launches
than was contemplated earlier, adds substantial flexibility to the
company's launch planning and will increase the cost of the revised
launch program from a previous company estimate of $85 million to $140
million, net of insurance proceeds. In combination, the available
launches would provide for a launch capability of a total of up to 80
satellites, adding substantial redundancy to our actual requirements.
Globalstar needs only to launch 24 to reach a total of 32 satellites
required for the initiation of commercial service.
"In establishing its business plan, Globalstar gave careful
consideration to the risk inherent in launching satellites and
provided for a contingency plan that could be swiftly implemented,"
stated Bernard L. Schwartz, chairman and chief executive officer of
Globalstar. "We had not only provided for the construction of 16 spare
satellites, but also arranged for launch options with both Boeing
(Delta) and Starsem (Soyuz). In the aftermath of the failed Zenit
launch, we now have firm commitments from these launch providers which
provide us with more than adequate opportunity to complete a
32-satellite constellation to support service start-up with a delay of
only a few months – a plan fully supported by our partners."
Globalstar estimates that it will require a total of approximately
$565 million in additional financing before service initiation in the
third quarter of 1999. This estimate includes previously disclosed
requirements of $325 million plus the $140 million associated with the
additional Soyuz and Delta 2 launches, and $100 million in cash
interest on borrowings and operating expenses anticipated through
commencement of commercial service in the third quarter of 1999. The
previously disclosed items include the cost for eight ground spare
satellites and expenditures on system enhancements as well as costs
associated with Globalstar's financing of service provider purchases
of gateways and user terminals, which Globalstar expects to recoup
after service provider acceptance of this equipment.
"We are today, as we always have been, fully committed to the
Globalstar program," said Mr. Schwartz. "Our contingency launch plan
is solid, our eight orbiting satellites are in excellent health,
gateway construction is well underway, user terminals are in
production and our service provider partners are fine-tuning their
marketing plans. At the appropriate time, we will go to the debt
market for the additional required funds or will use the other avenues
available to us to complete deployment of the system." The company
believes that its current cash balance of approximately $259 million
and the availability of its $250 million of unused bank credit are
sufficient to fund its requirements into the first quarter of 1999.
